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Copyright © 2022 3one4 Capital | All Rights Reserved.
Bribery and corruption can take many forms including cash or gifts to an individual or family members or associates, inflated commissions, fake consultancy agreements, unauthorized rebates, non-monetary favours and false political or charitable donations. These actions may be undertaken directly or through a third party. It is illegal and immoral to, directly or indirectly, offer or receive a bribe. We, at 3one4 Capital (“3one4”, “we”, “our”), do not tolerate bribery or corruption in any form or manner. 3one4 is committed to implementing and enforcing adequate procedures to prevent, deter, detect, and counter bribery andcorruption in any form or manner.
As a part of this commitment, offering, promising to offer, or accepting bribes, directly or indirectly, and beinginvolved in corruption is prohibited. This commitment shall reflect in every aspect of our business and therefore, 3one4 has developed this Anti-Bribery and Anti-Corruption Policy (“Policy”) to outline guidingprinciples and adequate procedures to prevent any activity or conduct relating to bribery, facilitationpayments, or corruption.
This Policy constitutes a minimum standard. It must be complied with in any country in which 3one4 does business even when this Policy is stricter than the anti-bribery and anti- corruption laws that are applicable inthat country, including both applicable local laws and those laws with extraterritorial application. However,when applicable anti-bribery and anti-corruption laws are stricter than this Policy, such laws must be compliedwith.
This Policy is applicable to all individuals engaged or employed by 3one4 irrespective of designation,including directors, senior managers, officers, other employees (whether permanent, fixed-term or temporary), consultants, contractors, trainees, interns, seconded staff, casual workers and agency staff, agents, or any other person associated with 3one4 and such other persons including those designated by the Compliance Officer from time to time (all of the aforesaid being collectively referred to as “Designated Persons”).
A. “Bribery” includes the offer, promise, giving, demand or acceptance of an undue advantage as aninducement for an action which is illegal, unethical or a breach of trust. Bribes often involve payments (or promises of payments) but may also include anything of value - providing inappropriate gifts, hospitality and entertainment, inside information, or sexual or other favours; offering employment to a relative; underwriting travel expenses; abuse of function; or other significant favours. Bribery includes advantages provided directly, as well as indirectly through an intermediary. Bribery also includes any attempt to doany of the foregoing;
B. “Concerned Person(s)” includes customers, suppliers, limited partners, investors, founders, and / or any other persons that interact or are engaged with 3one4 in any form;
C. “Corruption” includes wrongdoing on the part of an authority, or those in power, through means thatare illegitimate, immoral, or incompatible with ethical standards. It is usually designed to obtain financial benefits or other personal gain. For example, bribes offered or promised in the form of money, aprivilege, an object of value, an advantage to exert improper influence on decisions of an individual in his official capacity;
D. “Facilitation payment” are unofficial payments made to Public Officials in order to secure or expedite the performance/ non-performance of a routine or necessary action. They are sometimes referred to as'speed' money or 'grease' payments or ‘good-will money’. The payer of the facilitation payment usually already has a legal or other entitlement to the relevant action;
E. “Foreign Public Official” includes the “Public Officials” mentioned above who are not under the domestic jurisdiction (country of operation of 3one4). The definition of “Foreign Public Official” is subject to the definition prevalent in local regulation applicable;
F. “Gift” means anything of value and would encompass any gratuitous monetary or non-monetary benefit. It includes tangible items such as cash, precious metals and stones, jewellery, art, and any of their equivalents, and intangible items such as discounts, services, loans, favours, special privileges, advantages, benefits and rights that are not available to the general public;
G. “Hospitality” includes refreshments, meals, travel and accommodation. Entertainment generallyincludes vacation, trips, use of recreational facilities, ticket or pass for plays/concerts/sports events. Hospitality and entertainment may also qualify as a gift unless they fall within reasonable bounds of valueand occurrence;
H. “Kickbacks” are payments made in return for a business favour or advantage;
I. “Public Official” includes:
I. any person holding a legislative, executive or administrative office of the government, or acting inthe official capacity for or on behalf of a legislative, executive, or administrative office of the government, whether appointed or elected, whether permanent or temporary, whether paid orunpaid;
II. any person in the service or pay of the government or of a corporation established by or undera central, provincial or state statute, or an authority or a body owned or controlled or aided by the government or a government company or is remunerated by the government by fees orcommission for the performance of any public duty;
III. any judge, including any person empowered by law to discharge, whether by himself/herself or as a member of any body of persons, any adjudicatory functions;
IV. any person authorised by a court of justice to perform any duty, in connection with the administration of justice, including a liquidator, receiver or commissioner;
V. any person who performs a public duty, including for a public agency or public enterprise, orprovides a public service, as defined in the domestic law of the country and as applied in thepertinent area of law; and / or
VI. any elected or appointed officers or employees of public international or multilateralorganizations, such as the United Nations; and vii. any other person who is considered as public official according to applicable laws and regulations.
J. “Relevant Regulations” means the laws, regulations, bye-laws, etc. as may be applicable to 3one4 inthe conduct of its business across all the jurisdictions in which it operates. The key aspects of Prevention of Corruption Act, 1988, as applicable to 3one4, is provided as “Relevant Regulation” under Annexure A.
We are committed to establishing and maintaining necessary policies, procedures and a system of internal controls to mitigate risks relating to bribery and corruption and to communicate the channels available tostakeholders to report concerns.
A. Gifts, Entertainment and Hospitality:
I. Gifts, entertainment, and hospitality may be acceptable if they are reasonable, made in good faithand in compliance with the full disclosure to 3one4 and in accordance with advisories issued fromtime to time by 3one4. Any doubts in this regard should be clarified with the Compliance Officer.
II. No Designated Person(s) should accept or solicit any personal benefit from anyone in the course of their engagement with 3one4 in a manner that might compromise or appear to compromise their objective assessment relating to such engagement.
III. Designated Person(s) are prohibited from offering gifts or granting favours outside the ordinarycourse of business to current or prospective customers, clients, limited partners, founders of portfolio companies, portfolio companies, their employees or agents or any person (including butnot limited to Public Officials) with whom 3one4 or its business associates have a contractual relationship or intend to negotiate an agreement or transaction.
IV. Each Designated Person must familiarize themselves with any advisories issued by 3one4 inrelation to Gifts and Hospitality, including in relation to maximum values permitted.
B. Facilitation Payments or Kickbacks: Any Facilitation Payments and Kickbacks are inappropriate payments, and any such payment during the course of 3one4’s business or engagement is strictly forbidden.
C. Interaction with Concerned Persons: Where a Designated Person(s) is responsible for relationshipswith Concerned Persons, she/he may entertain the Concerned Persons for bona-fide purposes onlyin accordance with any instructions from 3one4. Records of such entertainment should be maintained.
D. Use of Third-Party Agents, Consultants and other Intermediaries:
I. We may be held responsible for bribes paid on its behalf by third parties, with severe and often irreparable consequences, even if we did not authorize these payments. Therefore, it is critical thatwe are careful in the selection of third parties, who will be representing us or acting on our behalf;
II. All dealings with third parties shall be carried out with the highest standards of integrity and in compliance with all relevant and applicable laws and regulations. Designated Person(s) must follow 3one4’s processes and adhere to the system of internal controls. Third party selection should never be based on receipt or expectation of a gift, hospitality, payment or favour of any kind or manner;
III. The following should be kept in mind prior to engaging a third party:
a. Appropriate due diligence is conducted and properly documented;
b. Appropriate anti-bribery and anti-corruption provisions are incorporated in the contracts, including the right to audit, as well as a clause on termination, if the partner/party fails to abide by the anti-bribery and anti-corruption terms; and
c. Formal written commitment is sought from the third party to ensure compliance to these standards.
E. Government Interaction: Doing business with the government is highly regulated and typically follows stricter rules than those in the commercial marketplace. If you work with government officials or a government-owned (or partially owned) company, you have a special duty to know and comply withapplicable laws and regulations, adhere to the highest standards of integrity and avoid even the appearance of impropriety. 3one4 may interact with the government, government officials and government agencies in multiple forms, such as: for seeking statutory or regulatory approvals. Designated Person(s) should always be truthful, accurate, cooperative and courteous while representing 3one4 before any government, government officials and government agencies.
F. Political, Community or Charitable Contributions and Sponsorships:
I. Designated Person(s) are not permitted to make political contributions from the funds, properties or other resources of 3one4 except political contributions approved by 3one4 in writing incompliance with applicable law.
II. 3one4 may make charitable donations for humanitarian needs and other factors, including emergency situations and disaster relief. Such contributions must be made in compliance with relevant policies of 3one4 as may be applicable. However, it is important that we exercisereasonable caution when making donations, such that the donations made shall be without anydemand or expectation, so as to ensure that our donations would not be considered inducements in any form or manner. Thus, contributions by 3one4 to community projects or charities need to be made in good faith and in compliance with this Policy and all other relevant policies and proceduresof 3one4, as updated from time to time.
III. Before making such a contribution, the Designated Person(s) should ensure that:
a. Such charitable contributions are not dependent on, nor made to secure, a business deal.
b. The contribution is always made to the charity and not to any particular individual, except where donations or grants are provided directly to affected victims of natural disasters.
c. Contributions should be given to entities where the end use of the contribution is known and/or controlled.
d. Contributions should only be made to charitable organisations which are registered under theapplicable laws of the country.
e. As far as possible, background checks on the charitable organisations should be carried out in all cases, especially to ensure that the charity does not act as a conduit to fund illegal activities in violation of anti-money laundering laws, anti-terrorism laws and other applicable laws.
f. Only such charitable contributions shall be made that are legal and ethical under the locallaws and practices.
IV. Sponsorships are closely allied to the various types of community / business activities undertaken by 3one4. These could range from sponsoring educational scholarships to local sports teams. Any sponsorship must be for genuine business or charitable objectives without any element of quid pro quo. Any such sponsorship must be transparent, duly approved, properly documented and duly reported as per our policies.
G. Mergers and Acquisitions, Joint Ventures, Partnerships:
I. We will undertake appropriate and reasonable due diligence regarding compliance with anti-bribery and anti-corruption procedures, and on the reputation and integrity of any business in which we make investments.
II. While acquiring a potential target or entering into a joint venture or partnership or similarbusiness arrangement, 3one4 will extend relevant policies to such business units, train employees of such business units, re-evaluate third parties and where appropriate, conduct audits on suchbusiness units.
H. Books, Records, and Internal Control Requirements:
I. Accurate and complete recordkeeping is essential to the successful operation of 3one4, as well as to our ability to meet our legal and regulatory obligations. Each Designated Person(s) has a responsibility to be accurate, complete and honest in what they report and record in all internaland external documents of 3one4, including but not limited to the accounting records, timecards, expense reports, invoices, payroll records, safety records, business records, performance evaluations, contracts, etc.
II. All business units and entities must maintain an effective system of internal control and monitoring of transactions.
III. We ensure maintenance of the records required to meet legal, tax and regulatory requirementsand securely dispose of records that are no longer needed or are beyond the statutory retention period.
IV. Designated Persons who see or suspect financial misconduct should notify their supervisorsimmediately, and contact the Compliance Officer.
3one4 shall, from time to time, designate an employee of sufficient seniority, competence and independenceas the compliance officer to ensure compliance with the provisions of this Policy (“Compliance Officer”) and the same shall be notified to the Designated Persons. All reports, complaints, doubts or concerns in relation to this Policy shall be raised by the Designated Persons to the Compliance Officer.
It will be the duty of each Designated Person(s) to report any non-compliance or any Red Flag indicators(refer Annexure B) noted so that necessary action can be taken by 3one4 promptly to mitigate the risks andother consequences arising therefrom. Designated Person(s) shall provide full cooperation for any enquiry orinvestigation conducted or to be conducted by 3one4 for potential violation of this Policy.
Every Designated Person(s) is encouraged to raise concerns about any bribery issue or any case of corrupt practice or any breach of this Policy or applicable Anti-Bribery and Anti-Corruption law at the earliest. If they are unsure whether a particular act constitutes bribery or corruption or if they have any other queries, these should be raised with their respective reporting manager and the Compliance Officer.
No personnel who in good faith, reports a violation of this Policy shall suffer any harassment, retaliation or adverse employment consequences. For the reported concern(s) of potential or actual violation(s) of thisPolicy, the Compliance Officer shall take appropriate steps such as:
A. Investigation
I. Enquiry or investigation of the reported concern for potential violation of this Policy shall beconducted by or with oversight of the Compliance Officer. The objective of such enquiry orinvestigation would be to determine the facts.
II. Each Designated Person shall co-operate with the investigation team and promptly respond to all requests for information.
III. All investigations shall follow principles of natural justice and shall ensure that the relevantDesignated Person(s) are provided with an opportunity to make their case before the investigationteam.
IV. Experts with the right knowledge and skills may be appointed to investigate the reported concern.
V. The investigation process and the report should be kept confidential and shall be shared only with such persons who have a “need to know” under applicable law or 3one4’s standardinvestigation process.
B. Corrective Action: If necessary, corrective actions shall be prescribed or suggested to appropriatemanagers, officers and employees for implementation.
C. Disciplinary Action: The Compliance Officer after considering inputs from relevant stakeholders shall recommend appropriate disciplinary action, including but not limited to suspension and termination of service of such a defaulting Designated Person(s). The Compliance Officer shall also recommend if the violation is potentially criminal in nature and should be notified to the relevant authorities underapplicable law. In the event of criminal or regulatory proceedings, the Designated Person(s) shall co-operate with relevant authorities. Depending on the nature and scale of default the Compliance Officer may also recommend to the Board to commence civil and/or criminal proceedings against such Designated Person(s) in order to enforce remedies available to 3one4 under applicable laws.
A. Any violation of this Policy by a Designated Person(s) will be regarded as a serious matter and shall resultin disciplinary action, including but not limited to termination of engagement, consistent with applicable law and the Designated Person’s terms of engagement.
B. Bribery is a criminal offense. Designated Person(s) will be accountable whether they pay a bribe themselves or if such Designated Person(s) authorizes, assists, or conspires with someone else in contravention to the anti-bribery and anti-corruption laws. Punishments for violating the law against an individual includes imprisonment, probation, and monetary fines, which will be at the sole cost andconsequence of such Designated Person(s).
3one4 reserves the right to vary and/or amend the terms of this Policy from time to time.
The Prevention of Corruption Act, 1988 (“PCA”) and many other Anti-Bribery and Corruption (“ABAC”) lawsand regulations around the world make it clear that bribery and corruption is prohibited and illegal. Violation of these regulations lead to fines, penalties, reputational damage, and in some cases criminal liability. The keyprovisions of PCA have been summarised below. For more information on these regulation and prevalent regulation(s) in the geography of operations, it is advisable to refer to the relevant government websites or seek guidance from legal experts.
Prevention of Corruption Act, 1988
The Prevention of Corruption Act, 1988 was enacted to prevent corruption in government departments and to prosecute and punish public servants involved in corrupt practices. An amendment was enacted(“Amendment Act”) and brought into force on July 26, 2018.
The Amendment Act provides that any public servant who obtains or accepts or attempts to obtain from any person, any ‘undue advantage’, either for himself or for any other person, with the intent to perform or cause performance of public duty improperly or dishonestly or to forbear or cause forbearance to perform such duty, shall be punishable with imprisonment for a minimum term of 3 (three) years and maximum of 7 (seven) years and shall also be liable to fine. The Amendment Act has defined ‘undue advantage’ to mean any gratification (not limited to pecuniary gratifications or to gratifications estimable in money), other thanlegal remuneration.
As per the Amendment Act, giving an undue advantage by a person to a public servant is considered anoffence punishable with imprisonment upto 7 (seven) years or fine, or both. However, if a person is forced / coerced to give an undue advantage but reports the same to the concerned authority within 7 (seven) daysof doing so, he shall not be liable for the same.
The Amendment Act prescribes the offence relating to bribing a public servant by a commercial organisation, wherein a commercial organisation has been defined to include not just a body or partnership incorporated and carrying on business in India, but also a body or partnership incorporated or formed outside India but carrying on business in India. The Amendment Act has a specific provision for offences committed by commercial organisations and persons associated with it. It provides that if a commercial organisation commits any of the offences listed out in the PCA, then every director, manager, secretary or other officerwith whose ‘consent or connivance’ the offence was committed, is to be made liable as specified under thePCA.
While an exhaustive list cannot be provided, set out below are indicative questionable transactions or situations that Designated Person(s) should be careful about – which, when appearing together or individually, should raise a ‘Red Flag’ to the Compliance Officer:
A. A contract requires the use of a third party consultant where the third party’s
principal or owner is a government official;
B. The business lacks qualifications or resources i.e., the Concerned Persons does not appear capable ofperforming the services being offered. Sham service contracts, under which corrupt payments are disguised using a consulting agreement or other arrangement are typical modalities for indulging inbribery or corrupt activities;
C. Any Concerned Person who provides guarantees of success or claims to have the ability to obtain licenses or other government approval without providing a description of a legitimate manner by which those goals will be accomplished;
D. Transactions involving unusual payment patterns or financial arrangements. Accordingly, a request to pay unusually high commissions is a warning sign of possible corruption. A request to deposit commissions in multiple bank accounts, perhaps in offshore banks, also justifies additional scrutiny;
E. A Concerned Person who refuses to accept an ABAC clause in the proposed contract;
F. Based on pre-acquisition due diligence, it becomes apparent that the potential counterparty has areputation for offering bribes or violating other laws or indulging in unusually structured transactions;
G. Inflated payouts to, or questionable role in the project of potential counterparty or its affiliate;
H. A Concerned Person resists or fails to provide details of parentage or has undisclosed principals,associates or subcontractors with whom it splits fees;
I. A Concerned Person refuses access to its books and records where requested under the proposed contract;
J. A Public Official suggests, requests, urges, insists, or demands that a particular third party, company, orindividual be selected or engaged, particularly if the official has discretionary authority over the business atissue;
K. A Concerned Person insists on dealing with government officials without the participation 3one4;
L. The fee, commission, or volume discount provided to the third party is unusually high compared to the market rate; and
M. A Concerned Person has a reputation for paying bribes, or requiring that bribes be paid to them, or has a reputation for having a "special relationship" with government officials.
Copyright © 2022 3one4 Capital | All Rights Reserved.
